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30 Minutes, Medium
a.
O
p
eratin
g
income
(
net of income tax
)
140
,
000
$
Loss on dis
p
osal
(
net of income tax benefit
)
(
550
,
000
)
(
410
,
000
)
Income before extraordinar
y
item 2
,
540
,
000
$
Extraordinar
y
loss
(
net of income tax benefit
)
(
900
,
000
)
Net income 1
,
640
,
000
$
Earnin
g
s
p
er share:
Earnin
g
s from continuin
g
o
p
erations
[(
$2,950,000 - $500,000*
)
÷ 200,000 shares
]
12.25
$
Loss from discontinued operations ($410,000 ÷ 200,000 shares)
(
2.05
)
Earnings before extraordinary items
[($2,540,000 - $500,000 preferred dividends) ÷ 200,000 shares] 10.20
$
Extraordinar
y
loss
(
$900,000 ÷ 200,000 shares
)
(
4.50
)
Net earnin
g
s
[(
$1,640,000 - $500,000
p
referred dividends
)
÷ 5.70
$
200,000 shares
]
PROBLEM 12.2
A
SLICK SOFTWARE, INC.
For the Year Ended December 31, 2015
Condensed Income Statement
SLICK SOFTWARE, INC.
b
.
d. The single 2016 $8.00 figure for EPS is unfavorable in comparison with 2015 performance.
PROBLEM 12.2
A
SLICK SOFTWARE, INC.
For the Year Ended December 31, 2015
Statement of Retained Earnings
SLICK SOFTWARE, INC. (concluded)
35 Minutes, Strong
a.
Net sales 10,800,000$
Costs and ex
p
enses:
Cost of
g
oods sold 6,000,000$
Sellin
g
ex
p
enses 1,104,000
General and administrative ex
p
enses 1,896,000
Loss from settlement of liti
g
ation 24,000
PROBLEM 12.3
A
PHOENIX, INC.
For the Year Ended December 31, 2015
Income Statement
PHOENIX, INC.
b
.
c. The “gain on sale of treasury stock” represents the excess of reissue price received over the
section of the balance sheet.
PROBLEM 12.3
A
PHOENIX, INC.
For the Year Ended December 31, 2015
Statement of Retained Earnings
PHOENIX, INC. (concluded)
20 Minutes, Easy
Total Number Book Value
Stockholders' of Shares per
E
qu
i
ty
O
utstan
di
ng
Sh
are
Be
g
innin
g
balance 840,000$ 40,000 21.00$
PROBLEM 12.4
A
A
LBERS, INC.
20 Minutes, Medium
a. Capital Stock
A
dditional Total
($10 pa
r
Paid-in Retained Treasury Stockholders'
va
l
ue
)
C
ap
i
ta
l
E
arn
i
ngs
S
toc
k
E
qu
i
ty
Balances, Januar
y
1, 20x
x
2,200,000$ 3,530,000$ 1,900,000$ -$ 7,630,000$
Prior period adjustment (net of income tax benefit) (160,000) (160,000)
Issuance of common stock; 10,000 shares @ $68 100,000 580,000 680,000
PROBLEM 12.5
A
RIVERTON CORPORATION
RIVERTON CORPORATION
Statement of Stockholders' Equity
For the Year Ended December 31, 20xx
b. Declaration/distribution of a 5% stock dividend has no effect on total stockholders’ equity.
Declaration of a cash dividend reduces total stockholders’ equity by the amount of the
dividend.
The two types of dividends do not have the same impact upon stockholders’ equity. A cash
PROBLEM 12.5
A
RIVERTON CORPORATION (concluded
)
40 Minutes, Strong
Jan 3 Dividends 382,000
Dividends Pa
y
able 382
,
000
240
,
000
dividend
p
a
y
able on Feb. 15 to stockholders of
Purchased 6,000 shares of treasur
y
stock at $40
p
er share.
2015
To record declaration of $1
p
er share cash
PROBLEM 12.6
A
a. General Journal
THOMPSON SERVICE
Cash
b
.
Stockholders’ e
q
uit
y
:
Ca
p
ital stock, $1
p
ar value, 500,000 shares authorized,
401,000 shares issued, of which 1,400 are held in the treasury 401,000$
Additional
p
aid-in ca
p
ital:
From issuance of ca
p
ital stock 4,202,000$
c. Com
p
utation of maximum le
g
al cash dividend
p
er share at Dec. 31, 2015:
Retained earnin
g
s at Dec. 31, 2015 3,452,600$
Less: Restriction of retained earnin
g
s for
treasur
y
stock owned 5
6
,
000
Unrestricted retained earnin
g
s3,396,600$
PROBLEM 12.6
A
THOMPSON SERVICE
December 31, 2015
Partial Balance Shee
t
THOMPSON SERVICE (concluded)
30 Minutes, Strong
Net (from
Income Source)
NE D NE NE
3.
4.
TECH PROCESS, INC.
PROBLEM 12.7
A
Stockholders’
Equity
a. Net Cash Flow
Current
Assets
Event
1
The purchase of treasury stock has no effect on either revenue or expenses and,
Reissuance of treasury stock at a price less than its original cost results in a loss, but
these losses are not recorded in the income statement. Instead additional paid-in capital
